Chancellor Angela Merkel has hailed a German court ruling seen as a major step toward resolving the eurozone debt crisis.

Merkel told parliament on September 12 that Germany was "living up to its responsibilities" as Europe's biggest economy.

"Germany is sending a strong signal to Europe and beyond," she said. "Germany is decidedly seizing its responsibility as largest economy and reliable partner in Europe."

She said that while the eurozone crisis would not be beaten immediately, Europe had made "initial progress" toward overcoming difficulties that at times appeared to threaten the very existence of the 17-nation eurozone.

Germany's Constitutional Court on September 12 rejected calls to block Europe's permanent rescue fund. The decision paves the way for German President Joachim Gauck to sign the European Stability Mechanism.

The ruling also is seen as a positive sign for a new bond-buying policy of the European Central Bank (ECB), which aims to lower the borrowing costs for debt-burdened countries like Spain and Italy.

The 500 billion-euro ($620 billion) European Stability Mechanism could not have been able to start work without Germany, its main contributor.

Jean-Claude Juncker, who chairs meetings of the eurozone states' finance ministers, said he planned to convene the first meeting of the fund's board of governors on October 8.

Calls For Federation

The German court ruling came as the president of the European Commission, Jose Manual Barroso, called for the European Union to be turned into a "federation of nation-states."

In a speech to the European Parliament, Barroso said he was not calling for a European "super-state," but said the EU would always be less than the sum of its parts unless the union is deepened.

"And let's not be afraid of the words, we will need to move towards a federation of nation-states. This is what we need," Barroso said. "This is our political horizon, this is what must guide our work in the years to come."

Barroso also set out plans for a single supervisory mechanism for all banks in the eurozone. He called the plans a "quantum leap...the stepping stone to the banking union."

In her speech to the German parliament, Merkel said that the European Central Bank could not be expected to oversee all banks in Europe.